Abstract

In the article, we review recent literature on fiscal sustainability with particular reference to problems that are specific to transition countries. While the original literature on fiscal sustainability is chiefly focused on industrial countries there are by now few works that have focused on fiscal sustainability in transition countries. Consequently, the article’s purpose is to assess the short-, medium- and long-term sustainability of fiscal policy (under set assumptions) on the national level in the great majority of transition countries which we divide into three main groups, i.e. Central and Eastern Europe (CEE), Southern and Eastern Europe (SEE) and the Commonwealth of Independent States (CIS). Based on simple mainstream theory measures of fiscal sustainability, the results indicate that fiscal sustainability seems to be a problem in many transition countries, particularly in CEE (e.g. Czech Republic, Hungary, and Poland) and the SEE region (e.g. Albania and Croatia).